CHESTER City football club is facing closure after it failed to pay a £180,000 tax bill, the Daily Post can reveal.

The Inland Revenue has filed a petition to wind up the club in the High Court after all other attempts to recoup the cash failed.

It could see the club declared bankrupt in just eight days' time, when the case is due to be heard in London on September 21.

Chester City, currently just three points behind the leaders Notts County in the Coca Cola Football League Two, has been dogged by financial problems for several years.

Last night chairman Stephen Vaughan denied the club was in danger of closing - although he admitted it was not getting enough people through the turnstiles to pay its tax bills.

The 44-year-old businessman, who controversially attempted to buy Everton director Paul Gregg's 23.2% shareholding in the premiership club in May, described himself as Chester's "sugar daddy".

He said his accountants have already made arrangements to pay the £180,000 arrears by Friday, and that he would continue to "prop it up".

He said he has already picked up the tab for a £167,000 PAYE income tax bill and a £152,000 VAT bill, earlier this year, and insisted there were no other outstanding debts.

He now plans to create four million new shares, in a bid to to re-coup the £4m he has loaned the club since he bought the 75% majority share for around £500,000 in October 2001.

On Thursday he will ask the club's board for permission to hold an extraordinary general meeting, when shareholders would discuss creating four million shares at £1 each, within the next four weeks.

He said the rescue package would balance the books in the short term. But he admitted that in the long term only a promotion to the Coca Cola Football League One, could solve the club's financial woes.

Mr Vaughan last night divulged exclusively to the Daily Post that he has contacted the city council who are the club's landlords at the Deva Stadium, requesting a meeting to discuss ways that the Coca Cola League Two club can improve their revenue potential at the ground.

"We are in something of a financial straitjacket at the club currently, inasmuch as we are restricted in what we can do at the Deva Stadium complex because of the terms of the lease.

"There are a number of initiatives that we would like to undertake in and around the stadium, which would be beneficial to the club and its finances," said Mr Vaughan.

The City supremo continued: "Under the current terms of the lease agreement, we are basically restricted so that we can only generate finance on match days and this is extremely restrictive.

"The original lease was agreed between a previous board of Chester City directors, the constructors of the stadium Morrisons, who are now under new ownership, and the city council. I am keen to get around a table with all the interested parties in order to find a suitable and agreeable way forward."

Mr Vaughan, who made his fortune through his promotion and sports management company Vaughan Trading, did not reveal any potential share buyers.

He said he would sell to "anyone who is interested".

He said: "We have been chasing arrears since the day I walked into the club. We were £3m in debt when I took it over and I loaned the club that amount plus about another million."

"What I'm doing now is balancing the books."

He added that the club would need 5,000 people coming through the turnstiles each home game to break even, compared to the current average of just 3,100.

He said: "The long term future of the club when we started out was to get back in the football league and climb the divisions.

"In order to achieve that we have to overspend to give the manager a fighting chance. We are three points behind the leaders so we are on course."

Fans last night greeted Mr Vaughan's shares plan with scepticism, and said £4m worth were unlikely to sell unless a major buyer emerged to take over the debt.

Barry Hipkiss, chairman of the Chester City supporter's club said: "Unfortunately I think if it went to shares it wouldn't work. I can't see people buying four million shares. You need big hitters to come in and buy shares in large blocks, some fans might be able to afford £100 shares here and there."

He said the first he heard of the winding up order was when the Daily Post telephoned.

He said: "I'm shocked and surprised, particularly as it's the Inland Revenue .

"It's very unfortunate that this comes at a time when we are getting it right on the field and Keith Curle is doing a fantastic job."

Anyone who wants to oppose or support the winding up order is invited to do so by 4pm on September 20, by writing to: the Acting Solicitor, Solicitor's Office, East Wing, Somerset House, Strand, London, WC2R 1LB or telephone 0207 438 7723, quoting reference SLR 11.